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A Glimpse into Chinese Law-Making

Stanley Lubman, a long-time specialist on Chinese law, teaches at the University of California, Berkeley, School of Law and is the author of “Bird in a Cage: Legal Reform in China After Mao,” (Stanford University Press, 1999).

The most that Westerners hear about Chinese law usually pertains to human rights violations, examples of arbitrary official conduct and a weak judiciary. While these problems remain critical, they tend to overshadow an equally important, though less headline-ready, topic: How laws are drafted in China and what that means for the country’ progress toward greater legality.

Legislative drafting has been going on quietly for decades, and some of the results of these efforts were on display at a presentation by Chinese officials given as part of an annual bilateral legal exchange program held recently in San Francisco.

The San Francisco presentation was the first of three programs, with appearances to follow in Denver and Washington D.C. It marked the beginning of the 2011 U.S.-China Legal Exchange, presented by the U.S. Department of Commerce and the Chinese Ministry of Commerce (MOFCOM). These annual bilateral conferences have been ongoing since the early 1980s.

Legal conferences are replete with the sort of technical discussion that rarely appeals to lay observers, but the meeting in San Francisco offered some important lessons for anyone concerned with the way the legal system works in the world’s second-largest economy.

The Chinese experts at this year’s session hailed from the Legislative Affairs Office of the State Council (China’s cabinet), the Legislative Affairs Commission of the National People’s Congress (China’s legislature), and MOFCOM.

One official described China’s Tort Law, which was adopted in 2010. He spoke of the plan formulated in1993 to pursue the “phased development” of civil law, which would entail the drafting in succession of laws on contracts, property, torts and foreign economic relations. The laws on contract, property and, most recently, torts, have now appeared.

In the Tort Law special provisions address product liability, automobile accidents, medical malpractice, environmental law, and rules on the treatment of animals. The principle of strict liability applies to producers or sellers of products that are defective and cause injury or damage, and also holds liable manufacturers or sellers who fail to recall products that are found to be defective. The speaker told of grappling with the question of how to define a “defect.” After considering foreign examples, the drafters decided that it should involve ”unreasonable risk or damage.”

Especially illustrative of difficulties in establishing legal principles in a highly stratified society undergoing social change were the problems encountered in trying to set the level of damages that should be paid by defendants found liable for damage or injuries that they had caused. This is a growing problem because of the increasing activity of consumer groups in asserting rights, and the frequency of incidents involving product liability ranging from defective computers to food that sickened or cause the death of consumers. But the speaker did not address the weakness of enforcement that is common.

Associated Press

Tourists walk near the Great Hall of the People where the annual National People’s Congress sessions are held in Beijing.

Foreign examples were not always considered appropriate for Chinese conditions. Punitive damages may be imposed on manufacturers or sellers who fail to warn consumers or to recall the products in a timely manner. At the same time, the drafters decided that in common-law countries punitive damages are sometimes “unreasonably high,” and they limited their application to medical malpractice cases and intentional production of defective products. Foreign examples suggested that psychological damage, not previously recognized in China, should create liability for “serious mental distress,” although the law does not specify how the amount of damages should be determined, which will have to be developed case by case.

Another official who worked on drafting of the anti-monopoly legislation outlined the law, the product of 13 years of work, while a MOFCOM official described the processes of reviewing applications for approval of mergers over a certain size and enforcing the law. The MOFCOM official reported that during 2008-2010, slightly over 350 applications were made to the ministry’s Anti-Monopoly Bureau, of which 305 were approved unconditionally; only one transaction was blocked (presumably Coca-Cola’s failed effort to acquire a soft-drink company) and the remainder approved with conditions.

Both speakers emphasized that drafters and enforcers alike have studied closely antimonopoly laws and their enforcement in the US and the EU. They emphasized, too, that as experience with mergers accumulates, the formulation of additional rules has become necessary, and is ongoing from ministries and the Supreme People’s Court. Law-making, they said, has been recognized as a process that has to be continuous.

There was little specific discussion from the Chinese side of law in practice, as opposed to exposition of the laws and procedures for their application, although discussants from the American side noted problems and raised questions. The Chinese did not discuss cases involving the application of the new laws, citing the relatively short periods of time that the laws had been in effect. Nor was the role of the courts addressed in detail, even though they were explicitly mentioned as sources of interpretation that were significant for the growth of legal principles.

Building a legal system is replete with deliberation over technicalities in any nation, but the enterprise is especially difficult in a huge country under authoritarian single-party rule, with traditions inconsistent with the rule of law, and which is undergoing dramatic social change. The presentation mentioned here illustrated the quiet work of legislative drafters who are producing a body of rules that could eventually constitute the framework for an effective legal system, one which could more effectively define and protect the assertion and vindication of the rights of Chinese business enterprises and Chinese citizens.